Justin Benson, a director in KPMG’s manufacturing practice, comments on the Markit/CIPS UK Manufacturing PMI figures published today.
He said: “With another month of PMI data above the long-run average, and solidly in expansion territory, manufacturers must surely have a spring in their step this month.
“Albeit at a slower pace, another increase in new order volumes, driven mainly by overseas orders, has meant that almost 50 per cent of UK manufacturers expect production to be higher in 12 months’ time. Despite the increase in input costs, business confidence is on the rise, leading to further job creation across the spectrum of manufacturers, from small to large. While this is great news for the sector, raw materials were scarce in some areas and there is evidence that pressure is increasing on supplier capacity.
“KPMG’s Rethink Manufacturing survey has shown that two thirds UK manufacturers expect to offset rising costs by either achieving savings elsewhere, or absorbing them. Pressures on margins will increase, leading to potential price rises and increased risk in the supply chain. Therefore, manufacturers need greater transparency in order to spot potential risks to future supply of key components early, to keep a close eye on cash/working capital and to ensure contingency plans are in place.”
